Which of the Following Best Describes the Auditors' Typical Observation

question 39

Multiple Choice

Which of the following best describes the auditors' typical observation of plant and equipment?

• A)The auditors observe a physical inventory of plant and equipment annually.
• B)The auditors observe all additions to plant and equipment made during the year.
• C)The auditors observe all major plant and equipment items in the clients' accounts each year.
• D)The auditors observe major additions to plant and equipment made during the year.

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Definitions:

Material Event

Any event that could have a substantial effect on the financial position or operating performance of a company and is of interest to investors or stakeholders.

Income Statement

A financial document that summarizes a company's revenue, expenses, and profits over a specific period, usually a fiscal quarter or year.

Special Item

Unusual or infrequent gains or losses in a company’s financial statements, which are not expected to recur in the foreseeable future.

Discontinued Operations

Components of a business that have been disposed of or are classified as held for sale, and will not be continuing operations in the future.